A cross-jurisdictional survey to identify smart practices for an Aboriginal Business Directory

(1)

A Cross-jurisdictional Survey to

Identify Smart Practices for an

Aboriginal Business Directory

January 2010

Al-Nashir Charania

Advanced Management Report, 598

University of Victoria

(2)

A Cross-jurisdictional Survey to Identify Smart Practices for an Aboriginal Business Directory Page 2 Artist: Simone McLeod

Name of Piece: Strength Together Medium: Acrylic on Canvas Source: Aboriginal Art Canada Gallery

The author of this report has chosen this particular portrait to signify the importance of stakeholders coming and working together. Strength is the necessary by-product of such a union.

(3)

A Cross-jurisdictional Survey to Identify Smart Practices for an Aboriginal Business Directory Page 3

ACKNOWLEDGEMENTS

There are several people who played an instrumental role in the making of this report. I want to thank everyone who participated in my research. Your input has been extremely valuable and an essential component to this report. The interviews opened my eyes to the wonderful work being done regarding Aboriginal procurement across Canada.

I want to give a special thanks to Dr. Lynne Siemens for her patience, mentorship, and encouragement. I was extremely fortunate to have her as a supervisor and have learned a great deal from her throughout this process.

This project would not have been possible without the support of my family, friends, and well-wishers. You have continued to believe in me, and I thank you for that. In particular, I would like to thank my parents, Zehane Bell, and Nadia Rajan, for seeing my real potential and helping me achieve it. I would also like to thank David Trudel, Dave Collisson, and Anne Kirkaldy for giving me the inspiration to work on this project regarding Aboriginal procurement in British Columbia.

(4)

EXECUTIVE SUMMARY

Aboriginal entrepreneurs in British Columbia are a diverse group, functioning within a wide range of industry sectors. They operate within a complex and changing environment, both in the marketplace and in their own communities, and face many challenges as they strive to develop their business enterprises. Despite the rapid growth of British Columbia’s Aboriginal peoples, Aboriginal enterprises have been underrepresented in their response to government procurement contract opportunities. In addition, to ensure the effective delivery of government sponsored programs designed for Aboriginal peoples, it is becoming increasingly necessary to consider Aboriginal business enterprises to design and deliver the goods and services.

This report’s objective is to provide a summary of smart practices to the BC government regarding an Aboriginal Businesses Directory (ABD). This will be accomplished by surveying current initiatives regarding Aboriginal procurement in Canadian government and non-government organizations. Work that has been completed or is currently underway in other organizations regarding Aboriginal procurement and ABD’s may inform the development of an ABD for British Columbia, depending on the relevance to the situation here. In this regard, the following key research question was identified to guide the discussion and propose recommendations for the design of an ABD for the province of BC: What are the

smart practices for the development of an Aboriginal Business Directory for the province of British Columbia?

This research’s scope is limited to government and non-government organizations in Canada, specifically regarding the administration and management of Aboriginal business directories. The report will provide insight into the planning that has been done by these organizations. This report will inform the Office of the Comptroller General within the British Columbia Ministry of Finance regarding the administration and management of an Aboriginal Business Directory for British Columbia.

Methodology

The research approach comprised two elements. First, representatives from various Canadian government and non-government organizations were interviewed by telephone and email. Second, a review of public documents and websites, and academic literature was conducted to determine current approaches, initiatives and practices regarding the administration and management of Aboriginal Business Directories in a variety of organizations. The following governments participated in the survey: Federal government of Canada, and the governments of Saskatchewan and Manitoba. The following

(8)

non-A Cross-jurisdictional Survey to Identify Smart Practices for an non-Aboriginal Business Directory Page 8

government organizations participated in the survey: the Toronto Aboriginal Business Association, Aboriginal Youth Mean Business and the Tale’awtxw Aboriginal Capital Corporation.

Results and Recommendations

There is a general consensus among Aboriginal peoples that economic self-sufficiency must come from the development of business enterprises by Aboriginal peoples themselves. Further, Canada’s Aboriginal peoples represent an untapped source of labour and partnerships. It is evident from both the review of the literature and the survey that was undertaken for this report that there appears to be considerable work underway with respect to Aboriginal economic development. However, with respect to Aboriginal procurement initiatives such as Aboriginal Business Directories (ABDs) specifically, few organizations have instituted ABDs. In addition, buy-in by Aboriginal enterprises into existing Aboriginal procurement initiatives has not reached its potential levels. The initiatives and planning that are currently present appear to have taken into consideration the importance of expanding the Aboriginal supplier base; however, this varies in level of sophistication across the organizations reviewed.

This research highlighted the various ways different government and non-government organizations engage Aboriginal vendors in procurement initiatives, and the issues and constraints regarding Aboriginal procurement initiatives. For example, the federal government’s Procurement Strategy for Aboriginal Businesses (PSAB) appears to be the benchmark for Aboriginal procurement initiatives throughout Canada. In addition, Industry Canada’s ABD is the most comprehensive national database of Aboriginal businesses, with a considerable amount of thought given to ensure the success of PSAB and the ABD.

The review of the literature and the cross-jurisdictional survey serve to inform the following recommendations for British Columbia:

 Aboriginal Business Directory Size

i) The BC government should highlight the benefits of listing businesses on the BC ABD to existing and new Aboriginal enterprises to increase the Aboriginal supplier base for government procurement tendering opportunities.

ii) The BC government should emphasize the advantages of collaborating with Aboriginal enterprises to non-Aboriginal enterprises via the BC ABD to ensure increase the Aboriginal supplier base for government procurement tendering opportunities.

 Aboriginal Business Directory Platform and Distribution

(9)

ii) The BC ABD should include a past service testimonials section, which contains feedback from previous clients of the Aboriginal enterprise.

iii) The BC ABD should also include searchable functions which will allow clients to seek Aboriginal enterprises based on the type of goods or services offered industrial sector, and geographic area.

 Definition of Eligible Businesses

i) The definition of what constitutes an Aboriginal enterprise for the benefit of the BC ABD should be consistent with the BC API Aboriginal enterprise definition.

 Updating Aboriginal Business Directory Information

i) The BC government should allocate adequate resources to ensure an instantaneous turn-around time for updating information on the BC ABD.

 Aboriginal Business Directory Resources

i) The Purchasing Services Branch (PSB) in the Ministry of Citizens’ Services should be tasked with the administration and management of the ABD. The BC government should allocate adequate resources to the PSB to ensure the successful administration and management of the BC ABD.

This report provides relevant information that will guide the development of an ABD for the province of British Columbia.

(10)

1.0 Introduction

1.1 Introduction

Procurement represents “millions of dollars of opportunities” for Aboriginal enterprises, but for a multitude of reasons, Aboriginal enterprises may find it difficult to respond to the procurement needs of both the government and non-government sectors (Aboriginal Human Resource Council, 2009). This may be attributed to capacity issues in the Aboriginal business community to respond to Requests for Proposals (RFPs) and other solicitations, and a lack of adequate Aboriginal vendor expertise in areas of government business (ibid.). These and other challenges facing Aboriginal enterprises are becoming increasingly complex, and the changing social and economic conditions of Aboriginal peoples have placed greater demands on both the government and non-government sectors across Canada.

In response to these challenging social and economic conditions, the British Columbia (BC) government is currently developing an Aboriginal Procurement Initiative (API) for review and approval by Treasury Board. It is anticipated that the approval for the API will occur before the end of this year (2010) (British Columbia Ministry of Finance (a), 2009). A key element in the BC government’s API is the creation of an Aboriginal Business Directory (ABD) for the province of BC. Therefore, a survey of similar initiatives in other organizations across Canada has been undertaken to inform the development of an ABD for BC.

1.2 Research Question and Objective

To inform the development of an ABD for the province of BC, the following key research question was identified to guide the discussion and propose recommendations for the design of an ABD for the province of BC: What are the smart practices for the development of

an Aboriginal Business Directory for the province of British Columbia? An ABD would provide a

source-list of Aboriginal vendors for procurement officers to use in the government procurement process. It would also provide a networking opportunity for both Aboriginal enterprises to non-Aboriginal enterprises to do business with one another.

The provincial government wishes to increase the Aboriginal supplier base for government procurement tendering opportunities by providing significant exposure to an Aboriginal business' products and services. The objective of this report is to provide a summary of smart practices to the BC government regarding an ABD. This objective is important because the ABD is a key element in BC’s Aboriginal Procurement Initiative. This will be accomplished by surveying current initiatives regarding Aboriginal procurement in Canadian government and non-government organizations. Work that has been completed or is currently underway

(11)

in other organizations regarding Aboriginal procurement and ABD’s may inform the development of an Aboriginal Business Directory (ABD) for British Columbia (BC), depending on the relevance to the situation here. This may include, but not limited to the following:

1. The successes attained, such as increased number of contracts for Aboriginal vendors, increased number of Aboriginal vendors competing for government contracts; 2. Challenges faced, such as ensuring adequate resources and buy-in into the initiative;

and

3. The day-to-day administration and management of an ABD, such as ABD structure and maintenance

The scope of this research was limited to government and non-government organizations in Canada, specifically regarding the administration and management of ABDs. Similar ABD initiatives in other jurisdictions will be reviewed as they are best positioned to comment on the administration and management of initiatives already present, and provide recommendations for further development.

1.3 The Client

The Office of the Comptroller General in the BC Ministry of Finance is tasked with developing an Aboriginal procurement policy to increase the Aboriginal supplier base for government procurement tendering opportunities (British Columbia Ministry of Finance (a), 2009). Instituting a British Columbia ABD will fulfil a key element of the policy.

Participation in this undertaking by the BC Ministry of Finance would be beneficial as it would provide a deliverable that falls within two major service goals of the ministry:

1. Goal 2: ‘A strong, competitive, and vibrant economy’ (British Columbia Ministry of Finance (b), 2009); and

2. Goal 3: ‘Provide governance frameworks that support government in effectively

achieving its objectives and providing the public with value for money’ (ibid.).

1.4 Outline of Report

This report is comprised of six key sections, including this introduction. Section two provides the background and context into the Aboriginal business directory. Section three presents the research methods used in the study. Section four reviews comparable programs in both government and non-government organizations within Canada. An analysis and discussion of the findings based on the research question is presented in section five, while section six offers recommendations for the development of a British Columbia Aboriginal business directory. Section seven concludes.

(12)

2.0 Background and Context

This section will provide background on Aboriginal peoples in Canada and the importance of Aboriginal economic development. The context of Aboriginal procurement in British Columbia (BC) will also be outlined, along with the relevance of this study to the development of an Aboriginal Business Directory (ABD) for BC. An overview of the procurement process in the BC government will also be summarized.

2.1 Aboriginal Peoples in Canada

Statistics Canada (2008, para. 8) defines Aboriginal identity in Canada as follows:

those who identify with at least one Aboriginal group that includes First Nations, Métis or Inuit, and/or those who reported being a Treaty Indian or a Registered Indian1, and/or those who reported they were members of an Indian band or First Nation.

According to the 2006 Canadian Census, there are 1,172,790 Aboriginal people in Canada, accounting for 3.8 percent of the country's total population. This total comprises 698,025 people of First Nations descent, 389,785 Métis, and 50,485 Inuit (Statistics Canada, 2008). In British Columbia, 4.8 percent of the population reported an Aboriginal identity in the 2006 Census (BC Stats, 2006b). The BC Aboriginal population is much younger than the non-Aboriginal population, where 47 percent of the First Nations and 44 percent of Métis population are less than 25 years old, compared to 29 per cent of the non-Aboriginal population (ibid.). The highest proportion of Canadian Aboriginal peoples live in the northern regions of Nunavut (85 percent), the Northwest Territories (50.3 percent), and the Yukon Territory (25.1 percent) (BC Stats, 2006a). The lowest proportion of Aboriginal peoples reside in the provinces of Prince Edward Island (1.3 percent) and Quebec (1.5 percent) (ibid.).

Aboriginal peoples in Canada face a number of social problems to greater degree than non-Aboriginal people overall. They have higher rates of unemployment (Statistics Canada, 2008), crime and incarceration (Perreault, 2009), poverty (Anderson, 2003), and substance abuse and health problems (Health Canada website, a). Aboriginal peoples also tend to have lower levels of education (Anderson, 2003). According to a special report on Aboriginal people in Canada commissioned by the TD Bank Financial Group, in spite of the considerable barriers that remain in ensuring significant socio-economic progress within the Canadian Aboriginal population, there is increasing optimism that things are changing for the better. This could be attributed to the “growing alignment of economic interests between Aboriginal peoples and the nation’s non-Aboriginal business community” (TD Bank Financial

(13)

Group, 2009, p.1). This alignment of economic interests can be achieved through business partnerships such as joint ventures between Aboriginal and non-Aboriginal enterprises (TD Bank Financial Group, 2009). Aboriginal enterprises stand to benefit from the experience, talent, and capital of established non-Aboriginal enterprises, while non-Aboriginal enterprises recognize the value in strengthening ties with Aboriginal peoples as partners and customers (ibid.).

2.2 Aboriginal Economic Development

This section will define Aboriginal economic development and the importance of establishing business enterprises to achieve economic self-sufficiency. It will also look at Aboriginal enterprises across Canada and in British Columbia.

2.2.1 Aboriginal Economic Development

The main characteristics of Aboriginal economic development include attaining economic self-sufficiency and improving the socio-economic standards of Aboriginal peoples while preserving and strengthening traditional culture and values (Anderson, 2002). Aboriginal peoples in Canada have been “largely excluded from sharing in this nation’s economic success” and consequently, many have “fallen behind the Canadian population in nearly all areas of socio-economic well-being” (Standing Senate Committee on Aboriginal Peoples, 2007, p.23). Some of the main barriers to Aboriginal economic development include the legal and regulatory environment2, lack of skilled labour, limited access to capital, and deficits in capacity3 (Indian and Northern Affairs, 2009a).

According to the Royal Commission on Aboriginal People, the total cost to the Canadian economy caused by the “socio-economic circumstances of Aboriginal peoples” in 1996 was estimated at $7.5 billion. This cost to the Canadian economy would rise to $11 billion by 2016 if the status quo was maintained (Indian and Northern Affairs, 1996). However, Aboriginal peoples believe that they can improve their socio-economic condition through economic development initiatives such as entrepreneurship and business development (Anderson, Kayseas, Dana, and Hindle, 2004).

2.2.2 The Need for Aboriginal Business Enterprises

Aboriginal peoples share a consensus that economic self-sufficiency must come from the development of business enterprises (National Aboriginal Financing Task Force, 1996; Anderson, 1999; Wien, 1999; Anderson, 2002; Auditor General’s Report, 2003; First Ministers

2

This includes the barriers in the Indian Act and other regulations that impede economic development and investment, especially on reserves (Indian and Northern Affairs, 2009a).

3

Aboriginal businesses, political leaders and institutions need to build capacity to identify and pursue economic opportunities (Indian and Northern Affairs, 2009a).

(14)

& National Aboriginal Leaders, 2005; Conference Board of Canada, 2006). Aboriginal peoples want to become self-sufficient, while preserving their traditional values in the process. Consequently, Aboriginal communities in Canada have “a desire to balance their traditional communal ownership of land and resources with the capitalist tradition of private property ownership” (Conference Board of Canada, 2005, p.8)

According to Orrin Benn, the president of the Canadian Aboriginal and Minority Supplier Council, there is a growing recognition among corporate Canada regarding the value of working with Aboriginal and minority-owned enterprises (Canadian Aboriginal and Minority Supplier Council, 2007a). Benn illustrates this by highlighting the increase in corporate Canada’s procurement with Aboriginal and minority companies: from $16 million in 2005 to over $27 million in 2006 (ibid.). Corporate Canada also recognizes that Aboriginal workers and business owners represent an untapped source of labour and partnerships (Working Group on Aboriginal Participation in the Economy, 2001; Mendelson, 2004; Luffman and Sussman, 2007). As Canada’s labour market tightens, employers are exploring many sources in their search for skilled workers and partners to respond to procurement contract opportunities. With anticipated shortages in many areas of the labour force, this growing population of skilled Aboriginal workers may constitute an important pool of labour (Luffman and Sussman, 2007).

2.2.3 Aboriginal Business Enterprises in Canada

There has been an exponential growth in the number of Canadian Aboriginal enterprises over the past decades. In particular, there has been an increase in small-scale, for-profit enterprises (Canadian Aboriginal and Minority Supplier Council, 2007b). This is illustrated by the fact that in the 1990’s, an estimated 6,000 Aboriginal enterprises existed (Arrowfax, 1990). Currently, the number now stands at close to 30,000 Aboriginal enterprises (Statistics Canada, 2004). Out of the estimated 6,000 Aboriginal enterprises in the early 1990’s, approximately 50 percent were small-scale, for-profit businesses, compared to the current value of approximately 90 percent (ibid.).

Approximately half of the Aboriginal business enterprises in Canada have been in operation for ten years or more in three sectors: primary industries, construction, and the manufacturing, transportation and warehousing sector (Statistics Canada, 2004). The youngest businesses were in professional, technical and social services, where only 30 percent had been in business for ten years or more (ibid.). Two-thirds of the businesses operate under a sole proprietorship structure, and over half stated that they operated in a highly competitive industry. In addition, most Aboriginal businesses focused on local markets to sell their goods and services, while 13 percent sold goods and services outside of Canada (ibid.).

(15)

Successful Aboriginal enterprises can help close the gap that exists between the socio-economic conditions of Aboriginal and non-Aboriginal peoples in Canada (Conference Board of Canada, 2008). It its report released in May 2008, the Conference Board of Canada highlighted the following businesses as successful Aboriginal businesses4 (ibid.):

1. Goodfish Lake Development Corporation- an Aboriginal corporation that provides dry cleaning, clothing manufacturing and repair, protective clothing rentals, and bakery services to the oil and gas industry in Fort McMurray.

1. Piruqsaijit Limited- an Inuit central management company owned by six Inuit development corporations.

2. Atuqtuarvik Corporation- an Inuit lending institution that assists Inuit firms in establishing and expanding their businesses.

3. Donna Cona Inc.- an Aboriginal business that specializes in information technology and consulting services.

4. Caisse Populaire Kahnawake- an Aboriginal-operated savings and credit union institution that has implemented a unique trustee agreement to collateralize land. These businesses were considered successful because they were able to build transparent board governance and create successful partnerships with non-Aboriginal businesses (Conference Board of Canada, 2008). In addition, they were also able to harness aspects of Aboriginal culture that are conducive to business success, including cultural networking and corporate–community responsibility (ibid.).

2.2.3.1 Aboriginal Business Enterprises in British Columbia

British Columbia (BC), along with other Canadian provinces, is experiencing “a rapid rate” of growth in Aboriginal entrepreneurship (Vodden, Miller and McBride, 2001; Statistics Canada, 2004). This is illustrated by the fact that in the last decade, the number of self-employed Aboriginal people increased by 30.7 percent, a rate that is nine times higher for self-employed Canadians overall (Premier of Manitoba Economic Advisory Council, 2005). BC’s Aboriginal entrepreneurs are a diverse group, operating within a wide range of industry sectors, both traditional and non-traditional (Vodden, Miller and McBride, 2001; Statistics Canada, 2004). Key sectors include fishing, forestry, arts and crafts, retail, construction, tourism and hospitality, and other services such as consulting and professional services

4

The Conference Board of Canada defines an Aboriginal business according to the following criteria (Conference Board of Canada, 2008, p.11):

1. The business must be Aboriginal-owned and operated;

2. The business has demonstrated growth of profits over a substantial period of time;

3. The business has created jobs within the communities in which they are based or the Aboriginal community at large;

4. The business has created wealth within the communities in which they are based or the Aboriginal community at large;

5. The business has improved the social conditions within the communities in which they are based and/or the Aboriginal community at large.

(16)

entrepreneurship (ibid.). Many of British Columbia’s (BC’s) entrepreneurs are under the age of 30, motivated by “a desire for financial independence, seeking new markets, and operating out of their homes” (Vodden, Miller and McBride, 2001; Statistics Canada, 2004, p.30). The following sub-section outlines the procurement process in BC and the importance of a BC specific Aboriginal procurement policy.

2.3 Overview of Procurement in British Columbia

This section will highlight the issues faced by Aboriginal enterprises in BC and describe the procurement process in the BC government. It will also briefly describe the proposed BC Aboriginal procurement policy that aims at increasing the Aboriginal supplier base to the BC government.

2.3.1 Issues facing BC’s Aboriginal Enterprises

.

According to Vodden, Miller and McBride (2001), BC’s Aboriginal entrepreneurs “operate within a complex and changing environment in the economy and in their own communities” (p. 39). These changes of significance include a growing Aboriginal population and movement from rural to urban areas. Changes in the legal and political environment that have taken place have increased access to natural resources, purchasing power and employment opportunities in Aboriginal communities (Vodden, Miller and McBride, 2001). Vodden, Miller and McBride (2001) also noted that there is “an urgent need” for economic development within Aboriginal communities (p.38). While this emphasizes the importance of the provision of services to assist Aboriginal communities in becoming economically self-reliant, the current socio-economic conditions in Aboriginal communities are linked with “a host of other issues that Aboriginal businesses must be aware of and propose measures to address them” (Vodden, Miller and McBride, 2001, p.41). These issues include basic education needs, health and family issues (Vodden, Miller and McBride, 2001).

Vodden, Miller and McBride (2001) further noted that Aboriginal entrepreneurs face many challenges as they attempt to create and build their enterprises. These challenges include difficulty in accessing capital, geographic and social isolation in rural and on-reserve locations, economic leakage from Aboriginal communities, and the lack of acceptance, respect and support in both Aboriginal and non-Aboriginal communities.

This complex and changing environment in which BC’s Aboriginal enterprises operate has meant that they have not been able to adequately respond to government procurement tender opportunities (Indian and Northern Affairs, 2006; British Columbia Ministry of Finance, 2009). In addition, according to the draft BC Aboriginal procurement policy, the

(17)

Aboriginal supplier-base for government contracts is limited due to the following factors (British Columbia Ministry of Finance, 2009):

 Capacity issues in the Aboriginal vendor community regarding response to Requests

for Proposals (RFPs) and other government solicitations;

 A lack of adequate Aboriginal vendor expertise in areas of government business; and

 A lack of a proper business advertising tool, such as an Aboriginal business directory, to showcase the various types of Aboriginal Businesses.

The following sub-sections will describe the overall procurement process that the BC government has instituted, and the rationale for instituting an Aboriginal procurement policy for BC.

2.3.2 The Procurement Process in the BC Government

Direct government programs and services within the BC government account for over $4 billion in procurement5 each year (British Columbia Ministry of Finance, n.d). An additional $12 billion in procurement activity is undertaken by the broader public sector6 in BC on an annual basis, with over 6,300 significant public sector procurement opportunities posted annually on the government’s electronic bidding website, BC Bid (ibid.). The BC government procurement activity for goods, services and construction is based on the principles of “fair and open public sector procurement” such as competition, demand aggregation, value for money, transparency and accountability (ibid.). Procurement governance for the BC government is overseen by the Procurement Governance Office (PGO) under a delegation from Treasury Board under the Financial Administration Act (ibid.).

In the BC government, the general process for the procurement of goods and services from a supplier starts when an individual ministry, the user, identifies the need for goods or services (British Columbia Ministry of Citizens’ Services, n.d). The user prepares a description of the requirement and provides it as a requisition to the Common Business Services (CBS) division of the BC Ministry of Citizens’ Services. CBS then determines the type of bid document to use based on the nature and complexity of the purchase. Once supplier proposals are received by the ministry, they are evaluated by the evaluation committee. Both successful and unsuccessful suppliers are informed of the outcome. Once the contract is negotiated and signed by the successful supplier, the service is performed or the goods are delivered to the ministry. Figure 1 below describes the common path taken for procurement in the BC government.

5

According to the BC Ministry of Finance website, procurement is defined as ‘the full range of activities related to purchasing of goods, services, and construction’ (British Columbia Ministry of Finance, n.d).

6

According to the BC Ministry of Finance website, the broader public sector is comprised of more than 150 organizations that are funded primarily by government. These include Crown corporations, public agencies and non-profit organizations (British Columbia Ministry of Finance, n.d).

(18)

A Cross-jurisdictional Survey to Identify Smart Practices for an Aboriginal Business Directory Page 18 Figure 1 – The Common BC Government Procurement Process

Source: Adapted from Responding to Government RFPs: A Proponent Guide to the Request for Proposals Process

(19)

2.3.3 British Columbia’s Aboriginal Procurement Policy

In response to the issues facing Aboriginal enterprises in BC, and to increase the Aboriginal supplier-base to the BC government procurement tender opportunities, the BC government is currently developing an Aboriginal procurement policy (British Columbia Ministry of Finance, 2009). In addition, if Aboriginal goods and service providers design and deliver the services to Aboriginal peoples, the efficiency of government sponsored programs to that target population would increase (British Columbia Ministry of Finance, 2009). In light of this, the BC government, through the Office of the Comptroller General (OCG), is developing procurement policy that meets the needs of ministries to “increase the participation of Aboriginal enterprises in the provision of goods and services to the BC government” (British Columbia Ministry of Finance, 2009).

The development of an Aboriginal procurement policy would provide “a common approach that would be used by ministries to support their diverse needs for Aboriginal contractors” (ibid.). These needs include, for example, Aboriginal contractors to provide social services by the British Columbia Ministry of Children and Family Development, and to build roads through Aboriginal lands by the British Columbia Ministry of Forests and Range and the British Columbia Ministry of Transportation and Infrastructure (ibid.).

An essential tool for the success of the Aboriginal procurement policy is a BC Aboriginal Business Directory (ABD). The ABD would assist procurement officials in the BC government in identifying suitable Aboriginal vendors as potential suppliers and provide procurement networking opportunities for both Aboriginal and non-Aboriginal suppliers (ibid.).

An ABD is defined as “a marketing tool designed to promote Aboriginal businesses to potential clients, while providing significant exposure to an Aboriginal business' products and services” (Enterprise Saskatchewan, n.d). Ideally, each business in the ABD is categorized according to the type of goods or services it provides, the location of the business, and comprises a wide variety of business sectors such as accommodations, construction, information technology, consulting services. In addition, the ABD is ideally updated on a regular basis to ensure information is relevant and up-to-date.

The following section will describe the methodology that was adopted for surveying organizations that have instituted ABD’s.

(20)

3.0 Methodology

This study set out to determine the work done by other organizations in Canada regarding the administration and management of Aboriginal Business Directories (ABDs). This section will describe the research methodology that was adopted. It will also describe the research design and outline some of the limitations with respect to this study.

3.1 Research Design

The primary purpose of this study is to provide recommendations to the British Columbia (BC) government regarding the development of an Aboriginal Business Directory for BC. To accomplish this, two research tasks were undertaken: Interviews with personnel in other organizations responsible for managing ABD’s; and a program review of other organizations. The following subsections present the methodology used for each of the tasks.

3.2 Interviews

The primary research of this project consisted of telephone interviews with personnel in various Canadian government and non-government organizations in charge of the administration and management of ABDs. Email interviews were also conducted with these organizations to supplement or clarify publicly available information, and in cases where officials were not able to partake in telephone interviews due to time and other constraints.

3.2.1 Interview Questions

The survey questions used to conduct the telephone and email interviews were developed in consultation with the client, and are attached in Appendix B. The survey consisted of ten questions and was designed to elicit information about the administration and management of ABDs. Table 1 shows the rationale behind the questions posed to the participants.

3.2.1 Participant Selection

The criteria that were used to select the organizations for this report included:

1. Similar Aboriginal procurement initiatives in other organizations in Canada; and 2. Availability of public information in English, including information from websites,

government and non-government documents, academic literature, and interviews. As a result of applying the above criteria, and in light of information that was publicly available, the organizations that were ultimately contacted were the federal government of Canada, and the governments of Saskatchewan, Manitoba and Nunavut. The non-government organizations contacted were the Toronto Aboriginal Business Association, Aboriginal Youth Mean Business, Tale’awtxw Aboriginal Capital Corporation, Apeetogosan (Métis) Development Inc., and the Northeast Aboriginal Business & Wellness Centre.

(21)

A Cross-jurisdictional Survey to Identify Smart Practices for an Aboriginal Business Directory Page 21 Table 1 – Rationale behind Choice of Questions in the Questionnaire

Question Rationale for Question

Please identify your

department/organization name and physical location address (Indicate what level of government if applicable).

 To classify/categorize the participants of the study.

What is the current platform of Aboriginal Business Directory i.e. print, online, etc.

 To ascertain how other jurisdictions have set up their existing ABDs and the

reasoning behind the chosen platform. How is information updated on the

Aboriginal Business Directory

 Who did it

 How often is it updated

 What was involved

 Who was consulted

 To examine the processes behind updating the ABD (e.g. number of people, resources, processes involved), in order to create a template for the BC ABD to potentially follow.

How is the Aboriginal Business Directory structured e.g. sorted by business, geographical area, etc?

 To determine how the ABD is classified (e.g. types of goods, geographical

location of business, business type, etc.).  To know if existing ABDs have a

classification system, and what methodology has been used. How many employee positions are needed

to maintain the Aboriginal Business Directory on a yearly basis?

 To determine human resource

requirements and the minimum number of personnel required to efficiently manage and ABD.

What are the costs associated with the Aboriginal Business Directory e.g. employees, webhosting, software, etc?

 To determine the financial implications of managing an ABD, specifically:

 Number of employee positions

required

 Employee wages

 Overhead costs

This information is necessary when planning the budget for the ABD.

Which department/agency was responsible for setting up the Aboriginal Business Directory? How long has the directory been in existence?

 To appreciate and learn from other organizations the rationale,

methodology, and issues faced in instituting the ABD.

(22)

Question Rationale for Question

How does your department/agency define an ‘Aboriginal’ business? How was the definition derived?

 To determine:

 The framework adopted for defining

an ABD.

 What exactly constitutes and

Aboriginal Business

 The rigour behind ensuring that

Aboriginal status is maintained This information can be used as a guideline for developing BC’s definition of an

Aboriginal Business. What are the challenges associated with the

administration and management of the Aboriginal Business Directory? How are they being overcome?

 To anticipate future challenges and potential solutions.

How successful has the Aboriginal Business Directory been? (this may include, but not limited to, the following: increased number of contracts for Aboriginal vendors,

increased number of Aboriginal vendors competing for government contracts, etc)

 To strive for the same successes and to build off of them.

3.2.1 Data Collection

Beginning the week of June 15, 2009, email requests were sent out to organizations that met the participant selection criteria (see Appendix C for the text of the email). In some cases, recipients forwarded the request to a more appropriate individual, or referred the interviewer as necessary. Once an individual agreed to participate in the survey, the survey questions were forwarded to the participant to preview prior to the telephone survey. The interviews took place from June 15 to August 30, 2009 (see Appendix E for the list of participants). In some organizations, it was necessary to speak to or obtain information from more than one individual as responsibilities were shared. Follow-up calls or emails were required to clarify information provided in the initial interview. Some participants provided the researcher with written information to supplement information provided in the verbal interview. Officials who were not available for a telephone interview due to time or other constraints were forwarded the interview questions to elicit detailed information regarding Aboriginal Business Directory (ABD) management in their organization. To complement the

(23)

data collected via the interviews, data was also collected through a review of publicly available resources including reports and publications on the websites of the organizations.

3.3 Program Review

Taking an inventory of comparable ABD initiatives contributes to this research for several reasons. First, an understanding of comparable initiatives is important from a management and collaborative approach. In order to understand the successes and challenges regarding the management of ABDs, the proposed ABD for BC must be able to build on the successes and appreciate the challenges associated with other ABDs. To do this, BC government ABD developers must examine the design and delivery mechanisms offered by other organizations. Second, understanding similar initiatives in other organizations is also beneficial in terms of collaboration and network creation. A cooperative approach with such organizations has the opportunity to benefit both the BC government, as well as partnering institutions.

This review of programs was conducted to supplement the information attained from the interviews. It involved reviewing publicly available material regarding ABD management such as reports, publications, and program descriptions on the various websites of the organizations surveyed.

3.4 Research Limitations

Some limitations exist with this research. With respect to the secondary research on initiatives and planning in other organizations, there was a lack of publicly available information, particularly relating to non-government organization documents and publications. The researcher was able to find limited literature online on the topic of the administration and management of Aboriginal Business Directories.

In regards to the primary research undertaken with officials in the government and non-government sectors, there are two key limitations. First, in general, there may be a reluctance to share information, hence it is possible that respondents did not feel comfortable in sharing detailed information about planning in their organizations. Therefore the researcher may not have received as full or complete a picture of the situation as would be ideal for this research.

Second, this research was conducted in the summer months, and it was sometimes difficult to speak to the most appropriate individual within the timeframe that had been established for the research. This resulted in the participation of officials, who, in some cases, may not have had the most complete information or knowledge about the subject matter. The

(24)

principal limitations with respect to the primary research undertaken included the inability to conduct lengthy telephone interviews due to participant time constraints, and the non-response of potential participants within the time frame established for this research. Nevertheless, with the knowledge gained from the review of programs, and the emailed responses, it was determined that this was adequate for this study.

The sections that follow will illustrate the findings from the cross-jurisdictional survey and program review regarding the administration and management of ABDs, discuss and propose recommendations for an ABD for BC.

(25)

4.o Findings

The purpose of this section is to present the findings from the survey of various Canadian government and non-government organization’s ABD administration and management. Section 4.1 looks at existing ABDs in the government sector, including the federal government, Saskatchewan, and Manitoba. Section 4.2 looks at comparable initiatives in the non-government sector, including the Toronto Aboriginal Business Association (TABA), Aboriginal Youth Mean Business (AYMB), and the Tale’awtxw Aboriginal Capital Corporation (TACC)7.

4.1 Government Jurisdictions

This section will highlight the findings from the government organizations reviewed. These organizations include the federal government of Canada, and the governments of Saskatchewan and Manitoba.

4.1.1 Federal Government of Canada

The federal government spends about $20 billion a year on goods and services (Business

Access Canada, 2008).90 percent of all government contracts are worth less than $100,000,

and many are awarded locally across the country (ibid.). The department of Public Works and Government Services Canada (PWGSC) is the main purchasing arm of the federal government, and assists federal government departments in the procurement of goods and services (Business Access Canada, 2008). The federal government advertises procurement opportunities to solicit bids from potential suppliers. Once bids have been received, PWGSC and the government department involved work together to evaluate the bids based on predetermined criteria. The supplier that offers the best value wins the contract (ibid.). Federal contracting is “an important market for small and medium-sized businesses” (Indian and Northern Affairs, 2009b). The federal government recognizes that Aboriginal business is “under-represented when it comes to bidding for and winning government contracts” (ibid.). A key aim of the federal government in this regard is to make it easier for the government and Aboriginal enterprises to do business with each other while “still meeting the principles of fairness, openness, and best value for the Canadian public” (ibid.).

4.1.1.1 Context and Rationale of the Procurement Strategy for Aboriginal Business (PSAB)

Consultant reports commissioned by the Department of Indian Affairs and Northern Development (DIAND) in the early 1990s found that federal procurement with Aboriginal businesses was “less than the potential capacity in certain sectors” (Indian and Northern

7

Repeated efforts were made to recruit participants from Apeetogosan (Métis) Development Inc., and the Northeast Aboriginal Business & Wellness Centre, but no participant was made available to the researcher; and although the officials in the government of Nunavut agreed to participate in the survey, completed surveys were not returned.

(26)

Affairs, 2002). In addition, the Report of the Royal Commission on Aboriginal Peoples also supported changes to procurement practices as “an avenue for increasing Aboriginal representation in the economic sector” (Indian and Northern Affairs, 2002, p.9). In light of these developments, in April 1996, the Canadian federal government launched the Procurement Strategy for Aboriginal Business (PSAB) (Indian and Northern Affairs, 2002). According to the PSAB website, the PSAB is designed to increase the participation of Aboriginal business in government procurement “through a program of mandatory and selective set-asides, as well as supplier development activities” (Indian and Northern Affairs, 2009c). The main objectives of PSAB are to stimulate Aboriginal business development and increase the number of firms competing for and winning federal contracts (ibid.). The federal government reserves8, or sets-aside, some contracts exclusively for competition among Aboriginal businesses (Indian and Northern Affairs, 2008). There are two kinds of PSAB set-asides: mandatory and voluntary set-asides. Mandatory set-asides occur when the contract is worth more than $5,000 and if it primarily serves an Aboriginal population (at least 80 percent), whereas voluntary set-asides are used by federal procurement officers whenever it may be practical to do so (ibid.).

When a business enterprise bids for a contract under the PSAB, it must complete and sign the form entitled ‘Certification Requirements for the Set-Aside Program for Aboriginal Business’ (ibid.). An Aboriginal bidder must provide proof of eligibility when Indian and Northern Affairs Canada (INAC) audits Aboriginal supplier certifications on a regular basis (ibid.).

According to the evaluation report conducted by Department of Indian Affairs and Northern Development (DIAND) and Prairie Research Associates in 2002, an essential tool for PSAB is the Aboriginal Business Directory (Indian and Northern Affairs, 2002). It also underscored the importance of “strengthening and maintaining” this directory of Aboriginal9 businesses (Indian and Northern Affairs, 2002, p.5).

4.1.1.2 Aboriginal Business Directory Characteristics

Federal government procurement officers seeking Aboriginal capacity for various goods or services contracts refer to two main databases: Business Access Canada’s Supplier Registration Information (SRI) database (Business Access Canada, 2008b), and Industry

8

According to the Indian and Northern Affairs website, when a procurement contract is reserved for Aboriginal bidders only, the federal department must indicate this in the procurement solicitation document. Consequently, the bids submitted by Aboriginal businesses are evaluated under the following principles of the federal government contracting: fairness, openness, and best value for the Canadian public (Indian and Northern Affairs, 2008).

9

According to the Procurement Strategy for Aboriginal Business (PSAB) website, the term ‘Aboriginal’ means a “Status or Non-Status Indian, Métis or Inuit person who is a Canadian citizen and resident in Canada” (Indian and Northern Affairs, 2008).

(27)

Canada's Aboriginal Business Directory (ABD), Strategis (Indian and Northern Affairs, 2009e). However, Indian and Northern Affairs Canada (INAC) officials only refer to the Strategis ABD to determine Aboriginal business capacity when asked by the procurement community, or when they “intervene on procurement strategies on behalf of the Aboriginal business community” (Indian and Northern Affairs, 2009d).

The federal government’s Strategis ABD is an online database of Aboriginal enterprises with a search capacity to find businesses. Industry Canada coordinates the ABD, which is pulled from the more general Canadian Company Capabilities (CCC) database10 (Industry Canada, 2008). The ABD is a directory of 210 businesses, organized by goods and services (25 categories), and by location throughout Canada (13 provinces and territories of Canada)

(Indian and Northern Affairs, 2009e). Each Aboriginal business is categorized according to the information on goods and services provided in the registration profile (Indian and Northern Affairs, 2008). The ABD is comprised of a wide variety of business sectors, including agriculture, defence, construction, information technology, and tourism (ibid.). In order to register their business on the Strategis ABD, Aboriginal firms can use the online application tool or contact the toll-free number listed on the Industry Canada website (Indian and Northern Affairs, 2009e). To be included in the ABD, companies must meet the following PSAB eligibility criteria (Indian and Northern Affairs, 2008):

1. Aboriginal people must own and control at least 51 percent of the business;

2. If the business has six or more full-time staff, one third must be composed of Aboriginal employees; and

3. An Aboriginal business must own and control at least 51 percent of the joint venture or consortium (if applicable).

4.1.1.3 Associated Costs

Interview statements of industry Canada officials maintained that the marginal costs of maintaining the Strategis ABD are minimal, with approximately “a few thousand dollars of employee time per year”.

4.1.1.4 Updating Information

According to Industry Canada officials, Aboriginal businesses in the Strategis ABD have the ability to update their own information online at any time. In addition, yearly reminders are sent by the ABD administrators to all of the listed businesses via an email, with telephone calls made if the businesses do not respond in due time. Industry Canada officials further noted that 95 percent of Aboriginal businesses have had their information reviewed in the

10

According to the Industry Canada website, the Canadian Company Capabilities (CCC) database has specialized

manufacturing, service, and product specific business directories that contain around 60,000 Canadian businesses (Industry Canada, 2008).

(28)

last 18 months. In addition, inclusion of a business in the Aboriginal Business Directory (ABD) signifies an endorsement by the federal government as to the businesses’ Aboriginal status, as all Aboriginal businesses are required to meet the Procurement Strategy for Aboriginal Business (PSAB) eligibility requirements before being placed in the Strategis ABD.

4.1.1.5 Challenges

Industry Canada officials noted that one of the main challenges of the ABD is enticing the Aboriginal businesses to register on the ABD. This is a challenge because ABD awareness and incentives are often unknown to the Aboriginal enterprises. According to the PSAB evaluation report published in 2002, one way to deal with this challenge could be to address the fact that the PSAB and the ABD are not actively promoted by federal purchasing personnel (Indian and Northern Affairs, 2002). The 2002 PSAB evaluation report advocates for the following ways of addressing this challenge (ibid.):

1. Ensure that information is distributed to federal purchasing personnel by the performance objective coordinators;

2. Ensure that federal purchasing personnel are able to refer Aboriginal businesses to business development tools; and

3. Ensure greater communication between PSAB program staff and Aboriginal economic development agencies.

According to both the PSAB team and Industry Canada officials, another challenge regarding the ABD is to make sure that all businesses in this directory are ‘Aboriginal’ as defined by the PSAB definition of an Aboriginal business11. To address this, the PSAB team, in collaboration with Industry Canada, pre-qualifies Aboriginal businesses to ensure their Aboriginal status according to the PSAB definition before registering them on the ABD.

4.1.1.6 Successes

Officials at Indian and Northern Affairs Canada (INAC) and Industry Canada reported that while they are unable to track transactions as a result of a company being listed on the ABD, they are able to track visits to the directory itself. For instance, INAC officials noted that in the month of June, 2009, over 300,000 visitors browsed the ABD. In addition, as Figure 3 below shows, the number and value of contracts awarded to Aboriginal-owned firms by the federal government shows an increasing trend since the inception of the PSAB12.

11

According to the PSAB definition, in order to be classified as Aboriginal, the business must meet the following criteria (Indian and Northern Affairs, 2008):

1. Aboriginal people must own and control at least 51 percent of the business;

2. If the business has six or more full-time staff, one third must be composed of Aboriginal employees; and

3. An Aboriginal business must own and control at least 51 percent of the joint venture or consortium (if applicable).

12

The PSAB performance report of 2004 highlights a drop in number and value of successful bids by Aboriginal businesses from 2003 onwards. This is attributed to the fact that the increasingly prevalent credit card purchases were notcaptured

(29)

A Cross-jurisdictional Survey to Identify Smart Practices for an Aboriginal Business Directory Page 29 Figure 2 – Number of Contracts and Dollar Values awarded to Aboriginal-owned firms

between 1997 and 2004

Source: Procurement Strategy for Aboriginal Businesses Performance Report 2004 (Indian and Northern Affairs

(2006).

The following sub-section will explore the administration and management of an ABD in the province of Saskatchewan.

4.1.2 Saskatchewan

The Saskatchewan government spends over $100 million each year on goods and services (Saskatchewan Ministry of Government Services, n.d). According to the Crown Investments Corporation of Saskatchewan (CIC), Saskatchewan Crown corporations purchase almost $2 billion worth of goods and services from Saskatchewan-based suppliers on an annual basis, with less than one percent of goods and services purchased from Saskatchewan Aboriginal-based suppliers (Enterprise Saskatchewan, n.d). The Purchasing Branch of the Saskatchewan Ministry of Government Services coordinates the purchase of goods and services for all government ministries, agencies, boards, commissions, and some Crown corporations (Saskatchewan Ministry of Government Services, n.d). This “centralized purchasing service” supports program delivery by the procurement of goods and services

and the inflation of total value of contracts by the presence of prior multi-billion dollar contracts (Indian and Northern Affairs, 2006).

(30)

that represent the “best overall value” for government (Saskatchewan Ministry of Government Services, n.d).

4.1.2.1 Context and Rationale for the Development of an Aboriginal Business Directory

According to the interview statements of Enterprise Saskatchewan (ES) officials, in 2004, a proposal was submitted by the Federation of Saskatchewan Indian Nations (FSIN) to the Crown Investments Corporation of Saskatchewan (CIC) for the creation of an Aboriginal Business Directory (ABD). In response, the CIC commissioned a study to determine the state

of Aboriginal businesses in Saskatchewan13. The study found that there were between 750 -

1200 Aboriginal businesses operating in the province, with almost 70 percent of Aboriginal businesses located in northern Saskatchewan (including Prince Albert, Meadow Lake, and Melfort). In light of these and other findings regarding Aboriginal businesses14, the CIC formed the Crown Aboriginal procurement advisory committee in 2006. ES officials noted that this committee helped to develop a common definition of what constituted an Aboriginal business, guided the development phase of an ABD, and discussed a system for assessing the progress of the ABD.

Enterprise Saskatchewan officials noted that a change in CIC’s strategic direction regarding program delivery prompted the analysis for an alternative department for the ABD. ES proved to be the best host for the Aboriginal Business Directory (ABD) based on its “strategic role” in business development, and the promotion of Aboriginal procurement and employment practices in Saskatchewan. Enterprise Saskatchewan officials further noted during the interviews that the organization “willingly accepted the transfer of the management of the ABD as it was a strategic fit within its mandate”. ES officials noted that their organization currently maintains a relationship with CIC’s Aboriginal procurement advisory committee to advance the ABD at no cost to the Crown corporations. In addition, ES is also committed to further consultations with the Crown corporations, mainstream businesses, and Aboriginal businesses to determine how the ABD will best meet their business needs.

CIC launched the Aboriginal Business Directory in May 200715 under the domain names of:

www.aboriginalbusinessdirectory.com and www.aboriginalbusinessdirectory.ca. Enterprise Saskatchewan officials noted that their organization is committed to developing an internal

13

According to the interview statements of Enterprise Saskatchewan (ES) officials, the study was completed by Derek Murray consulting associates in association with Points West Management Consultants and the School of Business and Public Administration, First Nations University of Canada.

14

According to the interview statements of Enterprise Saskatchewan (ES) officials, according to the CIC study, in order to be classified as Aboriginal, the businesses must be Aboriginal-owned (First Nation, Métis and Inuit), based on a minimum of 51 percent ownership, with operations based in Saskatchewan.

15

According to the interview statements of Enterprise Saskatchewan officials, the Aboriginal business relations unit of the Labour and Aboriginal initiatives division launched the directory.

(31)

system to keep the Aboriginal businesses listings up-to-date. They further noted that on June 18, 2009, the ABD was officially transferred from CIC to ES.

4.1.2.2 Aboriginal Business Directory Characteristics

According to the Enterprise Saskatchewan website, the ABD is a “marketing initiative that is designed to promote Aboriginal businesses to the Crown sector and other markets through out the province” (Enterprise Saskatchewan, n.d). The directory also aims to “provide significant exposure to an Aboriginal business' products and services” (ibid.).

The Saskatchewan ABD is an online database of Aboriginal enterprises with a search capacity to find businesses. It is a directory of 229 businesses, organized by goods and services (7 categories), and by location in Saskatchewan (23 regions in Saskatchewan) (Enterprise Saskatchewan, n.d). Each Aboriginal business is categorized according to the information on goods and services provided in the registration profile (ibid.). The ABD is comprised of a wide variety of business sectors, including agriculture, construction, manufacturing, and services. To register their business on the ABD, Aboriginal firms can register online. To be included in the ABD, enterprises must be Aboriginal owned with a minimum of 51 percent Aboriginal ownership, and be based in Saskatchewan (Enterprise Saskatchewan, n.d).

4.1.2.3 Associated Costs

Officials at Enterprise Saskatchewan explained that the cost of operating the Saskatchewan ABD was approximately $50,000 annually for administration and technical support. However, ES officials noted that services regarding the ABD are provided free of charge to Aboriginal businesses and subsidiary Crown corporations.

4.1.2.4 Updating Information

ES officials noted that the ABD coordinator updates information when requested by the registrants16. In addition, the ABD is updated on an annual basis to ensure that the businesses that are listed on the ABD still meet all ABD criteria. The ‘News’ section on the ABD website is updated on a regular basis as it pertains to the Saskatchewan business environment, Aboriginal success stories in the province, and new funding or grant program information.

4.1.2.5 Challenges

Enterprise Saskatchewan officials noted that the main challenges facing Saskatchewan’s ABD include keeping the business information up-to-date, confirming that the business still exists, and still is at least 51 percent Aboriginal-owned. To address this challenge, businesses

A cross-jurisdictional survey to identify smart practices for an Aboriginal Business Directory